Electronic Transfers up as Opay, Palm Pay, Others Rival UBA, GTB, Other Traditional Banks in Nigeria

Electronic Transfers up as Opay, Palm Pay, Others Rival UBA, GTB, Other Traditional Banks in Nigeria

  • An investigation has found that Nigeria's e-payment boomed in recent times as Nigerians continue to use digital channel
  • These micro-transactions came to light after an attempt by ex-CBN governor Godwin Emefiele to implement a cashless policy
  • Reports showed that transactions in the first quarter of 2024 increased by 88.09% to N237 trillion

Legit.ng journalist Zainab Iwayemi has over 3-year-experience covering the Economy, Technology, and Capital Market.

A recent finding on electronic transfer levy has shown that microtransactions drive Nigeria's e-payment boom, underscoring the growing use of digital channels in daily life.

Electronic transfers increase in Nigeria
Microtransactions boom in Nigeria as more Nigerians embrace digital ways of doing things. Photo Credit: Cavan Images
Source: Getty Images

Microtransactions are typically transactions valued at less than N10,000.

Why microtransactions increased in Nigeria

BusinessDay reported that the failed attempt at a cashless policy by then CBN governor Godwin Emefiele brought attention to these microtransactions.

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Several people switched to digital channels when physical naira became scarce by January 2023.

At the time, cashless transactions amounted to N39.58 trillion, up by 45.41% year over year, according to data from the Nigeria Inter-Bank Settlement System (NIBSS).

Cashless transactions rose by 44.84 percent to N126.73tn at the end of the first quarter of 2023 (before the cash shortage subsided), from N87.49tn during the same period in 2022.

Similarly, transactions involving no physical cash increased from N395.38 trillion in 2022 to over N600 trillion by the end of 2023 as more Nigerians used digital payment methods.

This trend persisted, with transactions rising by 88.09% to N237 trillion in the first quarter (Q1) of 2024.

Electronic money transfer levy

Experts contend that the surge in microtransactions bolsters the government's objectives for digital inclusion and the economy, even though it may not result in higher taxes for the government.

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Despite the notable growth in e-payment activities, the government did not receive much money through the Electronic Money Transfer Levy (EMTL) contribution.

The amount the government made from EMTL between January and April of 2024 in Q1, 2024 was N66.35 billion, which is the same as what it made in the same period in 2023.

This is mostly because the majority of transactions were under N10,000 and were exempted from taxes.

Adedeji Olowe, founder of Lendsqr said,

“Payment methods have become easier, faster, and better, and people are using them for everyday things.”
“Everyone from small kiosks to supermarkets now accepts transfers. If I go downstairs where I live, I can buy something worth N1,000 and pay with transfers.”

He said the development shows that the payment industry is developing and that real-time transfers are becoming a more widely accepted method of payment in a market that aims to use less physical currency.

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According to ACI Worldwide, a pioneer in real-time payments, Africa had the largest real-time share of electronic payments in 2023 —40 percent— with Nigeria leading the continent.

Paystack disclosed in its 2023 spotlight report that transfers accounted for 58% of all transactions made from Nigeria on the site.

Most transactions less than N10,000

The majority of transactions in the nation are for less than N10,000, according to experts in the payment industry.

An industry source commented: “The range below N6,000 makes up about 45 percent of transfer transactions. Some in the range of N10,000 is around 25 percent”

Nosa Oyegun, VP of product and innovation at Kuda Bank, also said:

“There has been a boom in microtransactions. When the cashless issue happened, people started moving away from cards and focusing more on transfers as a means of payment. Because of that, transfers are no longer just for P2P but are now widely adopted.”

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According to Oyegun, this has resulted in a surge in the number of new fintech companies, including Moniepoint, Opay, and PalmPay.

He added that even point-of-sale withdrawals are typically made using transfers rather than cards.

Nigerians abandon ATMs, choose online transfer

Legit.ng previously reported that Automated Teller Machines (ATMs) are becoming less common in Nigeria as a result of a recent analysis that shows how quickly online transfers are taking over.

The trend was ascribed by the research to Nigeria's increasing smartphone adoption as well as the use of mobile applications for financial transactions by banks and fintech.

Nigerians' payment habits have changed significantly over the last ten years, with online transfers rising to N2,610.5%.

Proofreading by James Ojo Adakole, journalist and copy editor at Legit.ng.

Source: Legit.ng

Zainab Iwayemi avatar

Zainab Iwayemi (Business Editor) Zainab Iwayemi is a business journalist with over 5 years experience reporting activities in the stock market, tech, insurance, banking, and oil and gas sectors. She holds a Bachelor of Science (B.sc) degree in Sociology from the University of Ilorin, Kwara State. Before Legit.ng, she worked as a financial analyst at Nairametrics where she was rewarded for outstanding performance. She can be reached via zainab.iwayemi@corp.legit.ng